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NCUA Board Member Todd M. Harper Statement on the Temporary Final Rule on Regulatory Relief in Response to COVID-19 Extension

December 2020
NCUA Board Member Todd M. Harper Statement on the Temporary Final Rule on Regulatory Relief in Response to COVID-19 Extension

As Prepared for Delivery on December 17, 2020

Myra and Justin, thank you for your presentation today, and thank you to everyone who has worked on this COVID-19 regulatory relief temporary rule during the past nine months.

In April, as our country was just beginning to grapple with the economic impact of the pandemic, the NCUA Board temporarily amended three regulatory requirements to ensure that federally insured credit unions remained operational and liquid through the duration of the pandemic.

Specifically, the temporary final rule raised the maximum aggregate amount of loan participations that a federally insured credit union may purchase from a single originating lender to the greater of $5,000,000 or 200 percent of the federally insured credit union’s net worth. The rule also suspended limits on the eligible obligations that a federal credit union may purchase and hold. Finally, due to physical distancing practices made necessary by COVID-19, the rule tolled the required timeframes for the occupancy or disposition of properties not being used for federal credit union business or that have been abandoned. These temporary amendments were to remain in place through December 31, 2020.

I supported that temporary and targeted rule because it provided credit unions with a few more sensible short-term tools that they could use in case of pandemic-induced liquidity or operational issues. At that time, none of us knew how long the pandemic and the related economic fallout would last. With vaccinations now beginning, we nevertheless know that the pandemic will last for at least several more months.

In the best-case scenario, forecasters predict the economy will return to its pre-pandemic output level by late 2021, though it will take much longer for employment to recover. Because of the ongoing economic uncertainty and because of staff assurances that these changes are consistent with safety and soundness, I will follow their advice and support extending this targeted relief until December 31, 2021.

In supporting this temporary rule, I want to make clear that we would need to follow the normal rulemaking process of seeking public comment if we make any of these changes permanent. The information obtained in any such rulemaking may affect my future views on the advisability and merit of these matters.

Before closing, I have one question. Several stakeholders have recently asked whether we will extend the interagency temporary appraisal deferral rule, which we also issued in April. That temporary standard, which expires on December 31, allows credit unions to defer appraisals and written estimates of market value for a grace period of up to 120 days after loan closing for covered transactions. Will the NCUA be extending the interagency temporary appraisal deferral rule? If not, could you please explain why?

Mr. Chairman, I have no further comments or questions. Thank you.

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